insurance conference-damascus 2005 bancassurance in lebanon arope and blom experience
TRANSCRIPT
2Insurance Conference-Damascus 2005
Table of Contents
Bancassurance: Regional Trends Lebanese Model proposal Lebanese Insurance Market Bancassurance in Lebanon Arope / BLOM experience
3Insurance Conference-Damascus 2005
Bancassurance: Regional Trends
Bancassurance is the distribution of insurance products through bank channels.
Europe discovered Bancassurance in the late 70’s and according to a recent study conducted by “AM Best” , significant changes are expected in the Middle East moving over a Bancassurance Distribution Model.
4Insurance Conference-Damascus 2005
Bancassurance: Regional Trends
Projections: Growth forecasted for Premiums in Personal Lines insurance over the coming 3 to 5 years, mainly due to the following factors:
Expatriate workers are prompting the development of compulsory medical and motor insurance>>impact the concept of insurance among locals
Regulations Reforms that provide a comprehensive insurance framework and open the region to foreign investment
Low insurance penetration rates in the region’s countries.
5Insurance Conference-Damascus 2005
Lebanese Model Proposal
Similarities between our both insurance markets:– Environment effects– Cultural beliefs– Client behavior
These similarities lead us to believe thatultimately, the Syrian market will be developingin a similar way to the Lebanese, especially in
the area of Bancassurance.
6Insurance Conference-Damascus 2005
Lebanese Insurance Market Socio-demographic environment
In 2003, Lebanon’s GDP was around $19 billion, two-third of which came from the Services Sector
The Lebanese Population is estimated at around 4 millions
Two-third of the Population is in the 15-64 years age bracket
Life Expectancy at birth is estimated at 72 years.
7Insurance Conference-Damascus 2005
Lebanese Insurance Market Socio-demographic Environment
Active population constitute 40.5% of total population, nearly 1.62 million
83% of the active population work in the private sector
40% of active population hold “white collar” jobs.
8Insurance Conference-Damascus 2005
Lebanese Insurance MarketMarket Figures
Non Life (2003)Penetration Rate 2.1%Per Capita Density $95
Life (2003)Penetration Rate 0.7%Per Capita Density $35
Market Premium Income
27%
73%
Life
Non Life
9Insurance Conference-Damascus 2005
Lebanese Insurance Market Non- Life Market ( in Million USD)
$311 $316$323
$342
$381 $397
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
1999 2000 2001 2002 2003 2004
10Insurance Conference-Damascus 2005
Lebanese Insurance Market Life Market (in Million USD)
$82 $88
$98
$125
$139
$180
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
1999 2000 2001 2002 2003 2004
11Insurance Conference-Damascus 2005
Lebanese Insurance Market Non-Life Density in selected countries
$5 $6 $25 $35 $40
$93$117
$243$288
$715
$891
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Egypt Syria Morocco Jordan KSA Lebanon Kuwait UAE Cyprus France Germany
Den
sit
y 2
002
Density in Lebanon is small by world standard
12Insurance Conference-Damascus 2005
Lebanese Insurance Market Non-Life Penetration Rate in Selected Countries
0.41% 0.46% 0.50%0.72%
1.95% 2.01%2.18% 2.22%
2.97%
3.70%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
Egypt KSA Syria Kuwait Jordan Morocco Cyprus Lebanon France Germany
pene
trat
ion
rate
(20
02)
This rate is the highest among Arab Countries
13Insurance Conference-Damascus 2005
Lebanese Insurance MarketOpportunities
Potential for a future market growth: only 30% - 35% of the Lebanese population is insured and awareness is growing.
Insufficiency of NSSF and Government participation in covering all medical needs of population and retirement schemes.
14Insurance Conference-Damascus 2005
Lebanese Insurance MarketOpportunities
Compulsory motor insurance (bodily injury only) was introduced in 2003
Insurance for expatriates is also compulsory workmen Insurance is compulsory, but not
yet in force Introduction of new law for Public safety in
2005: Decennial for new buildings, Third Party for elevators and Earthquake.
15Insurance Conference-Damascus 2005
Bancassurance in Lebanon Market Size
Bancassurance operations are estimated at around 20% of the total Lebanese insurance market in 2003.
In the Life sector, premiums increased six-fold over the period 1992-2002, with growth mainly fueled by the introduction of Bancassurance during the last few years
Today, Bancassurance accounts for 31% of all life premiums.
16Insurance Conference-Damascus 2005
Bancassurance in Lebanon Different Business Models
Banks with participation in Insurance Companies Insurance Companies fully or partially owned by
Banks Banks writing insurance through their fully owned
Brokerage Firms.
17Insurance Conference-Damascus 2005
Bancassurance in Lebanon Market Facts
47% of Lebanese banks sell insurance products OTC
21% of Lebanese banks work only through affiliated insurers
18% of banks work through independent insurers 8% of banks work through both affiliated
insurers and independents insurers.
18Insurance Conference-Damascus 2005
AROPE/BLOM Experience BLOM Bank Group
BLOM Bank– Network of 44 branches in Lebanon– Off-shore Banking Unit in Limassol, Cyprus– Branch in Damascus Free Zone– Branch in Amman, Jordan
B.S.O, المهج5ر و س5وريا 2 بن5ك branches in Damascus, 1 branch in Aleppo & 1 branch in Latakieh.
BLOMINVEST, the group’s Investment Bank Banque Banorient, located in Geneva Banque Banorabe, H/O in Paris with branches in London,
Dubai, Sharjah AROPE Insurance, H/O in Beirut and 5 branches in
Lebanon
19Insurance Conference-Damascus 2005
Largest Bank in Lebanon since 1981 till 2004
BLOM chosen as the best Bank in Lebanon by renown international sources:the Banker, Euromoney, Global Finance and Capital Intelligence
AROPE/BLOM Experience BLOM Bank
20Insurance Conference-Damascus 2005
AROPE Positioning Consolidated results based on regular growth since 1974 Among the best: 7th rank within a market of 56 Insurance
companies . First Insurance company ISO certified Pioneer in the Bancassurance model creating a financial
“ one stop Shop” solution.
AROPE Insurance was established in 1974 to:Handle BLOM’s own insurance business Supply BLOM clients with all their Insurance needs
AROPE/BLOM Experience AROPE Insurance
21Insurance Conference-Damascus 2005
AROPE/BLOM Experience AROPE Financial Indicators
Year Premiums S/H Equity Profits ROE Solvency Ratio
2004 24,687,117 11,659,528 2,334,973 25.04% 47.23%2003 14,265,712 9,324,322 1,753,692 23.16% 65.36%2002 11,369,904 7,570,706 1,401,195 22.71% 66.59%2001 10,732,512 6,169,379 1,135,332 22.55% 57.48%2000 8,708,767 5,034,179 864,652 20.73% 57.80%
New Decree:
R.O.E.: 20.39%
Solvency Ratio: 45.47%
22Insurance Conference-Damascus 2005
AROPE/BLOM Experience Benefits for BLOM Bank
New source of revenue (in tightening financial markets)
Leveraging existing infrastructure (network, front office employees, IT, etc.)
Strengthening relation with clients (continuity insured by renewals of policies).
23Insurance Conference-Damascus 2005
AROPE/BLOM Experience Benefits for Arope
Using a large existing Network Large Existing Client-base allows for synergies in
marketing: “A good Bank client is a good Insurance client” Development of Personal Line / Retail insurance
business (easy marketing via bank branches) Risk diversification (large number of small policies in
portfolio) Low operating & distribution cost Limited collection problems
24Insurance Conference-Damascus 2005
AROPE/BLOM Experience Benefits for Clients
Value-added service Convenience: One-Stop Shop for all their financial
needs Payment facilities
25Insurance Conference-Damascus 2005
AROPE/BLOM Experience Bancassurance Operations
Direct Bancassurance : OTC products
Motor Compulsory Bodily Injury Motor Material Damage Travel Property (office and home).
27Insurance Conference-Damascus 2005
AROPE/BLOM Experience Bancassurance Operations
Indirect Bancassurance: BLOM retail products
Retirement Plan: Damanati Education Plan: Waladi Car Loan: Sayarati Consumer Loan : Kardi Home Loan: Darati
Credit cards
29Insurance Conference-Damascus 2005
AROPE/BLOM Experience IT Solution
Two existing models of IT solutions: Online: One database for both, Bank and
Insurance Company Off-line: Separate Database
We opted for the second option for Banking Secrecy’s sake